Fitch Rates American Express' Preferred Share Issuance 'BBB-'

November 10, 2014 02:04 PM Eastern Standard Time

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned a rating of 'BBB-' to the $750 million in
preferred stock issued by American Express Company (AXP, rated 'A+/F1'
by Fitch). This preferred issuance represents approximately 1% of AXP's
total risk-weighted assets at Sept. 30, 2014.

AXP had previously stated that it would issue preferred shares for Basel
III capital planning purposes. More specifically, the new Tier 1 ratio
requirement under Basel III is 150 basis points higher than the current
common equity Tier 1 ratio and regulators have started using the new
minimums to assess capital adequacy in the CCAR process.

Fitch believes AXP's strategy is consistent with other large financial
institutions which have included preferred stock in their non-common
Tier 1 capital structures.

KEY RATING DRIVERS - Preferred Shares

AXP's preferred stock rating is five notches below the entity's
Viability Rating (VR) of 'a+' in accordance with Fitch's assessment of
each instrument's respective non-performance and relative loss severity
risk profile. The preferred stock rating includes two notches for loss
severity given these securities deep subordination in the capital
structure, and three notches for non-performance given that the coupon
of the securities is non-cumulative and fully discretionary.

Fitch has accorded these preferred securities equity credit of 50%,
which is in line with its methodology in assessing and rating bank
subordinated and hybrid securities.

RATING SENSITIVITIES - Preferred Shares

The preferred stock ratings are directly linked to AXP's VR and would
move in tandem with any changes in AXP's credit profile.

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